How can Fintech help improve financial well-being? With Mastercard, Coinweb, DailyPay and more

This August at Fintech Times, we want to highlight some of the amazing things fintechs are doing around the world. We always hear about “the latest breakthrough innovation that does good for society,” but do these innovations do good for those already in an advantageous position, or do they help make the world of finance more accessible?

There are many different facets to the concept of “fintech for good”, one of the major benefits being increased financial well-being for consumers. We have spoken to several companies in the industry to find out more.

Financial equity

Opening our conversation, Jeannie Waldeninnovation and marketing manager at DailyPayexplains how financial equity is achieved through the applied use of fintech in the workforce.

“Diversity, equity and inclusion are at the forefront of many business leaders’ minds as they strive to create work environments where everyone feels welcome. However, financial equity is an often overlooked aspect. Financial equity and inclusion means ensuring individuals have equal access to professional opportunities, financial systems, products and services, and ultimately wealth At DailyPay, we…help businesses improve the financial equity of their workforce by offering on-demand pay to their employees.

“With demand pay, employers provide a much-needed lifeline and cash flow to their employees who are often unbanked or underbanked. DailyPay’s technology platform allows employees to transfer earned wages to any bank account, debit or payment card at the touch of a button.

“Using DailyPay can help employees save an average of $1,205 per year in reduced fees from loans, overdraft fees and late fees. Investigations performed by Aite-Novarica Group shows that 95 percent of those who were previously dependent on payday loans in some way either stopped using payday loans or reduced their use after using DailyPay. Additionally, 97 percent of those who said they had overdrawn their bank account before using DailyPay rarely or never incur overdraft fees after using DailyPay.

“This helps users improve their credit, build savings and feel more financially capable and independent by reducing the need to rely on payday loans, payday advances or personal loans from family and friends. The mission-driven innovation DailyPay created is an integral part of how we improve people’s lives every day.”

Economic understanding

“Fintechs can help improve the financial well-being of people in many ways, for example by increasing people’s understanding of the world of finance,” says Jean-Louis WarnholzCEO and co-founder of Future.

He said: “Only 57 percent of US adults are financially literate, according to a survey by Milken Institute. Fintechs have a role to play in creating greater awareness of the impact our daily choices have, not only on our lives today, but on our future and the future of generations to come.

“At Future, we focus on the intersection of economic and environmental sustainability, giving our members choices that are good for the planet and good for their wallets. More money and less carbon often go hand in hand.”

Insight into money management

Colby Thameschief technology officer at Certificatepoints to the relationship between the insights fintech tools provide and the financial health of the underserved.

“Fintechs can provide access to consumer data and analytics in new, innovative ways that can help us understand consumer motivations and trends. They also help open financial and money management channels for unbanked and underbanked, helping to lift more consumers into safer financial management positions, Thames explains.

He continues: “Tools that fintechs can offer such as personal budgeting, automated savings, cost analysis and a holistic view of finances all give consumers more insight and options than ever before, allowing them to better manage and optimize their financial health.

“Many fintechs offer a wider suite of payment options for consumers compared to their traditional banks, allowing them flexibility in the way they pay for things. In addition, many fintechs also offer more security and fraud protection, giving consumers added peace of mind.”

Open bank

David Joneshead of fintech at MasterCard UK and Ireland, see the use of open banking as an enabler of financial well-being.

“Financial well-being is fundamentally important to society,” shares Jones. “To drive prosperity, people need to be financially engaged and confident. But financial well-being cannot be made possible without financial inclusion – accessibility and equal opportunities to access financial services.

“Unfortunately, however, around 7.1 million people in the UK – or 14 per cent of the adult population – currently fall under the definition of being ‘economically excluded’, meaning they could potentially struggle to access affordable and fair financial services. With people locked out of the financial system in this way, there is no hope of achieving financial well-being. And in the current cost of living crisis, this is critical for millions of people across the country.

“Everyone, regardless of background, has the right to accessible, high-quality, reliable and safe financial services and products. Fintech and others new and emerging technologies have an important role to play in adapting products and services to meet the needs of underserved groups.

“In the case of open banking fintechs can build tailored services for specific groups of underserved people, thereby increasing the level of economic well-being in the wider population. Open banking data can give fintechs insights into people’s financial data, including consumption insights. This means that these organizations can build personalized financial products that are best suited for an individual.

“Lenders, for example, are increasingly recognizing the value of open banking in addition to traditional credit data when assessing a person’s affordability. In fact, 70 percent of lenders are expected to adopt open banking technology by 2023. It’s these personalized services, enabled by open banking, that can help people manage their money and stay out of debt, ultimately driving financial well-being. especially during the cost of living crisis.”

Active participation

Sarah Billerco-founder of FinTech Sandbox and leads at Lots of Fintech Hubs, describes how the wider use of fintech has allowed more people than ever before to engage with financial services; which has ultimately improved their way of living.

“Fintech has delivered innovation to financial systems dating back to cuneiform tablets and biblical times,” comments Biller. “Its power is to expand financial access to more people through new technologies that can make trading and accounting more efficient. We see fintech as critical to providing financial accessibility and access, so people can find agency and ultimately take control of their financial life.

“Fintech provides access to ensure that everyone is able to actively participate in the financial system, by building affordable, accessible financial products and services that engage all communities. It also offers greater inclusion by delivering creative solutions that reduce inequality of access, increase affordability and improve quality. The result of inclusion is that local communities become safer, more robust and sustainable, which is the basis for a strong financial system.

“People must have access to technology. It must be made available affordably, on a large scale, and to all communities and people who can benefit from it. Financial access is also irrelevant if there is not a sustainable earth to live in, and ESG reporting is the imperative function for companies to finally act and take their responsibilities.

“Fintech also requires access to data and collaboration throughout the ecosystem to provide access and agency. Innovation hubs provide opportunities to build ecosystems and promote innovation among new fintechs that benefit the financial system and communities.”

A wave of innovation

To conclude our conversation, Toby GilbertCEO and co-founder of Coinwebprovides an overview of how fintech’s decades-long development and innovation drive the realization of a better connected world.

“Fintech has actually existed for well over 20 years. You can argue that PayPal was and is fintech, but back in the late 1990s the industry was labeled “payments”. Regardless of the glossary, the goal is to use technology to advance the existing economic system, which is archaic at best. But as much of a dinosaur as it may be, it is a powerful one with significant vested interests at stake, intertwined with politics in what could be considered an unhealthy relationship. Therefore, any move to disrupt these cozy relationships is met with strong resistance, as PayPal did in 2000.”

Gilbert continues: “But as payment platforms transformed how payments were made using digital wallets back then, micropayments piggybacking on telecommunications networks across Africa enabled the likes of M-Pesa to make instant micro-transfers between retail users, literally changing the landscape of leaving aside the fact that this acted as a catalyst enabling small businesses to start up that were logistically impossible beforehand, it also solved problems in many areas as important as hunger and education by introducing liquidity to the market.

“The second bounce of the ball today is payments powered by blockchain technology, which promises to automate processes today that are unnecessarily slow, such as the Swift network. In today’s time, thinking that an international transfer can or should involve some kind of manual process is nothing short of madness, and the fact that it can take up to two or three days to process is madness, unless you have some sort of vested interest in hanging out in the capital a bit longer!

“For this to happen, institutional pushback to blockchain must be overcome when we fully expect them to embrace the technology, at which point the world will experience the next wave of fintech benefiting it.”